Alleged Fuel Smuggling, Reason for Trafigura’s Cancelled Permits

President López Obrador assures foreign companies have allegedly engaged in fuel smuggling, naming Trafigura as one of them.

In late September Trafigura saw a series of its permits cancelled by the Ministry of Energy, reported by MBN. As specified in reports published by the Ministry shortly after the announcement, the permits dealt with import permissions in fuel, diesel, and gasoline. At the time, a spokesperson for the company said they saw “no valid basis for the suspension of import permits for Trafigura Mexico. Trafigura complies with applicable laws and regulations in the jurisdictions in which it operates, including Mexico.” Now, it seems as though the permits were cancelled for allegedly taking part in what the President described as “fuel smuggling.”

“We have found that some of these famous foreign companies were transporting contraband fuel and Trafigura's import permit has been suspended,” said the President. The comments made during his daily morning news press conference, mark, according to analysts, a “new development in a web of corruption probes of some of the world's biggest energy traders across several countries in Latin America.”

Through an emailed statement the company denied any wrongdoing. “Trafigura strongly denies that it is or has been improperly transporting and/or delivering fuel into Mexico. Trafigura complies with applicable laws and regulations in the jurisdictions in which it operates, including Mexico.”. Furthermore, they detailed that the company has provided documentation and evidence to relevant authorities and will continue to do so, until the issue is resolved. On his part, the president said that the attorney general was already looking into the issue.

Moreover, experts had commented that the measure taken by the Ministry was only the most recent event in the federal government’s open preference for state companies, like PEMEX and CFE, over the private initiative. The permits in question, initially to be expired in 2038, were given to Trafigura in the later half of 2018, before President López Obrador came into office.

Other companies caught in the federal government’s measures include Vitol, the independent energy trader, whose alleged irregularities in documenting refined oil products that enter Mexico could lead to criminal charges for tax evasion being brought against it. Vitol, however, denies any wrongdoing, and points to a second company tasked in the past with import classification.